In Alabama, an Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage is a legal agreement that allows the owner of a working interest in an oil or gas lease to assign a portion of their royalty interest to another party. This arrangement is commonly used in the oil and gas industry to distribute the benefits and risks associated with oil and gas exploration and production. The assignment typically involves the transfer of a stated percentage of the overriding royalty interest from the working interest owner to the assignee. The overriding royalty interest is a share of the production from the lease that is separate from the working interest. It entitles the assignee to receive a percentage of the production revenue, usually without being responsible for any costs associated with drilling and operating the well. There are different types of Alabama Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage, including: 1. Assignment by Working Interest Owner: This type of assignment occurs when the owner of the working interest in a single lease decides to assign a portion of their overriding royalty interest to another party. The assignee becomes entitled to receive a percentage of the production revenue generated from the lease. 2. Assignment of Single Lease: In this scenario, the assignment involves transferring the overriding royalty interest from the working interest owner to another party for a specific lease. This means that the assignee will only receive the assigned percentage of production revenue from that particular lease. 3. Stated Percentage Assignment: This type of assignment specifies a fixed percentage of the overriding royalty interest that is being assigned to the assignee. The percentage can vary depending on the agreement between the parties involved but is typically stated clearly in the assignment document. Overall, an Alabama Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage provides a mechanism for working interest owners to share the economic benefits of a lease with third parties, while still retaining control over the operations and development of the lease.
Alabama Assignment of Overriding Royalty Interest by Working Interest Owner, Single Lease, Stated Percentage
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FAQ
NRA = 40.00 net mineral acres x ([1/5] Lease Royalty Rate / [1/8] Standard Royalty Rate) NRA = 40.00 x (0.20 / 0.125) NRA = 40.00 x 1.60 NRA = 64.00 Net Royalty Acres This mathematical concept can also be used inversely to calculate your net mineral acres in a parcel based on the Net Revenue Interest (NRI) you are ...
To calculate the number of net royalty acres I'm selling, I use this formula: [acres in tract] X [% of minerals owned] X 8 X [royalty interest reserved in lease] X [fraction of royalty interest being sold]. 640 acres X 25% X 8 X 1/4 X 1/2 = 160 net royalty acres.
To calculate the NMA, you need the gross number of acres and the percentage of your mineral interest. To complete the calculation, simply multiply the gross acreage by your mineral interest. For example, if you owned 25% interest on the minerals under a 400-acre tract of land, you would have 100 NMA.
If there is an NPRI that exists, you would have to determine the # of net royalty acres by taking your royalty rate and subtracting the NPRI from it and then dividing by 12.5%.
Overriding Royalty Interest (ORRI) ORRIs are created out of the working interest in a property and do not affect mineral owners. An overriding royalty interest (ORRI) is often kept or assigned to a geologist, landman, brokerage, or any entity that was able to reserve an interest in the properties.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
Overriding Royalty Interest: A given interest severed out of the record title interest or lessee's share of the oil, and not charged with any of the cost or expense of developing or operation. The interest provides no control over the operations of the lease, only revenue from lease production.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
